Puerto Rico-Based Euro Pacific International Bank Suspended Over Compliance Issues

The Office of the Commissioner of Financial Institutions has suspended the operations of Puerto Rico-based Euro Pacific International Bank due to a lack of internal controls, compliance issues, and insolvency.

Background

Euro Pacific International Bank was founded by Peter Schiff, a US stock broker and financial analyst, and had 15,000 accounts by the end of 2019. The bank is located in San Juan, Puerto Rico, and offers mutual funds and precious metals accounts among other services.

Investigation and Suspension

The investigation into the bank’s activities began after it was discovered that the bank did not have adequate measures in place to prevent money laundering and offshore tax evasion. Despite repeated opportunities to comply with regulations, the bank failed to do so, according to Commissioner Natalia Zequeira. The bank’s suspension comes after a joint investigation by the Puerto Rican government and the Joint Chiefs of Global Tax Enforcement.

Lack of Compliance

The Office of the Commissioner of Financial Institutions cited a lack of internal controls and compliance issues as reasons for the suspension. Zequeira declined to release information on the number of clients the bank has or its total assets, citing confidentiality agreements.

Impact on Creditors

Zequeira did say that creditors would be paid in a certain order. The suspension of the bank’s operations means that creditors will not receive payments as usual.

Global Effort Against Tax Evasion

The Joint Chiefs of Global Tax Enforcement launched an operation two years ago to scrutinize financial institutions in their member countries, including Puerto Rico. The organization is overseeing some 100 civil and criminal investigations worldwide. “Our message is that the game is up for offshore tax evaders and that any UK citizens involved with this bank should come and talk to us,” said Simon York, the United Kingdom’s chief in the international group.

IRS Investigation

Jim Lee, chief of the IRS Criminal Investigation unit, stated that the Puerto Rican financial industry will not be a haven for tax evaders or illegal conduct. He added that the agency’s investigations into the bank are ongoing and independent from those conducted by the Puerto Rican government.

Key Points

• Euro Pacific International Bank was suspended due to lack of internal controls, compliance issues, and insolvency.
• The investigation began after it was discovered that the bank did not have adequate measures in place to prevent money laundering and offshore tax evasion.
• Creditors will be paid in a certain order.
• The Joint Chiefs of Global Tax Enforcement launched an operation two years ago to scrutinize financial institutions in their member countries, including Puerto Rico.
• The organization is overseeing some 100 civil and criminal investigations worldwide.